This market is getting very interesting. It has been under pressure all week, and volatility has increased dramatically. In fact, most of the indicators have turned bearish -- except for the most important one: price.

$SPX has held above the 1540 support level, and if this turns out to be a third successful bottom in that area, one would expect the market to challenge the recent highs. However, with the weight of the evidence on the other side (i.e., bearish), it would seem likely that a full-blown, intermediate-term correction is about to ensue. But only a close below 1540 can verify such a bearish view.

Equity-only put-call ratios have been on sell signals for some time and still are. Market breadth indicators are on also sell signals.

Volatility indices $VIX and $VXO) have exploded to the upside this week. As a result, it is possible that $VIX is establishing an uptrend. That would be bearish for stocks.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.